MARKET NEWS

Palm oil stockpiles in Malaysia dropped for the first time since February as exports from the world’s second-largest producer climbed on strong festive demand.

Inventories fell 2.6 percent from a month earlier to 1.56 million metric tons in May, the Malaysian Palm Oil Board said on Tuesday. That compares with a 0.6 percent increase forecast in a Bloomberg survey last week. Crude palm oilproduction rose 6.9 percent to 1.65 million tons, the highest since October.Shipments jumped 17 percent to 1.51 million tons, the highest since August and beating the 1.45 million tons estimated in the survey.

Benchmark futures recorded their fifth monthly decline in May in the longest run of losses since 2005, as traders bet that production in Malaysia and Indonesia is rebounding from El Nino-induced drought. Growers including Felda Global Ventures Holdings Bhd., IOI Corp Bhd. and Golden Agri-Resources Ltd.have said they expect palm oil output to rise in the coming months.

“It’s going to be bullish in the short term,” David Ng, derivatives specialist at Phillip Futures Sdn. said by phone from Kuala Lumpur. “Stocks became lower, production recovered less than anticipated and demand looks quite robust at the moment.”